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EXHIBIT 10.10
SECURITIES EXCHANGE AGREEMENT
BY AND AMONG
SONOMA INTERNATIONAL
AND
KEY WEST CONCH HARBOR, INC.
OCTOBER 15, 1996
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TABLE OF CONTENTS
SECTION 1. DESCRIPTION OF TRANSACTIONS
1.1 Exchange of Securities
1.2 Closing
1.3 Closing Deliveries
1.4 Conditions to Closing of Sonoma
1.5 Conditions of Closing of the Stockholders
1.6 Definitions
SECTION 2. REPRESENTATIONS OF THE STOCKHOLDERS
2.1 Organization
2.2 Corporation and Individual Powers
2.3 Authorization
2.4 Capitalization
2.5 Effect of Transactions, Compliance with Obligations
2.6 Brokerage
2.7 Consents
2.8 Status of Stockholders
2.9 Unregistered Securities Under Securities Act
2.10 No Distribution of Stock to Public
SECTION 3. REPRESENTATIONS OF SONOMA
3.1 Organization
3.2 Corporate Power
3.3 Authorization
3.4 Capitalization
3.5 Preemptive Rights, Registration Rights
3.6 Financial Statements
3.7 Liabilities and Obligations
3.8 Employee Matters
3.9 Employee Benefit Plans
3.10 Commitments
3.11 Tax Matters
3.12 Assets
3.13 Effect of Transactions, Compliance with Obligations
3.14 Litigation
3.15 Legal Compliance
3.16 Subsidiaries
3.17 Brokerage
3.18 Environmental Matters
3.19 Certain Payments
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3.20 Consents
3.21 Authorization to Issue Stock
3.22 SEC Reports
SECTION 4. THE STOCKHOLDERS COVENANTS
4.1 Consummation of Agreement
4.2 Business Operations
4.3 Access
SECTION 5. SONOMA'S COVENANTS
5.1 Consummation of Agreement
5.2 Business Operations
5.3 Access
5.4 Approvals of Third Parties
SECTION 6. INDEMNIFICATION
6.1 Indemnification by the Stockholders
6.2 Indemnification by Sonoma
6.3 Conditions of Indemnification
6.4 Waiver
6.5 Remedies Not Exclusive
6.6 Costs, Expenses and Legal Fees
6.7 Specific Performance
SECTION 7. TERMINATION
7.1 Termination
SECTION 8. GENERAL
8.1 Amendments
8.2 Survival of Representations, Warranties and Covenants
8.3 Headings
8.4 Governing Law
8.5 Notices and Demands
8.6 Severability
8.7 Expenses
8.8 Confidentiality, Publicity and Disclosures
8.9 Entire Agreement
8.10 Counterparts
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SECURITIES EXCHANGE AGREEMENT
Sonoma International, a Nevada corporation ("Sonoma"), and the
stockholders of Key West Harbor, Inc. a Florida Corporation ("KWCHI"), who are
signatories to this Agreement (the "Stockholders"), enter into this Securities
Exchange Agreement dated as of October 15, 1996 (this "Agreement").
SECTION 1. DESCRIPTION OF TRANSACTION
1.1 Exchange of Securities. Subject to and upon the terms and
conditions contained herein, at the Closing, Sonoma will issue 300,000 shares
of the common stock, par value $.002 of Sonoma (the "Stock"), to the
Stockholders in accordance with Paragraph 2.4 hereof, and in consideration
therefore, the Stockholders will transfer, assign and convey all of the issued
and outstanding capital stock of KWCHI (the "Capital Stock") to Sonoma.
1.2 Closing. The closing (the Closing") of the transactions
contemplated herein will take place at the offices of Sonoma International,
0000 Xxxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, at 10:00 a.m., on the date as soon
as practicable after the date hereof and as agreed to by the parties hereto
(the "Closing Date").
1.3 Closing Deliveries. At the Closing, the following shall occur:
(a) The Stockholders shall have delivered to Sonoma
certificates representing all the issued and outstanding capital stock of KWCHI
(the "KWCHI Stock"), together with stock powers, executed in blank;
(b) Xxxxx X. Xxxxx, counsel for KWCHI and the Stockholders,
shall have delivered to Sonoma any reasonable legal opinions dated as of the
date of the closing needed to consummate this closing.
(c) Xxxxxx X. Xxxxxxxxx, counsel for Sonoma, shall have
delivered to the Stockholders a legal opinion, stated as of the Closing Date
and in form and substance reasonably satisfactory to the Stockholders;
(d) The Stockholders shall have delivered to Sonoma all
authorizations, consents, approvals, permits and licenses referenced in
Schedule 2.7.
(e) Sonoma shall have delivered to the Stockholders a copy of
the resolutions of the Board of Directors of Sonoma authorizing the execution,
delivery and performance of this agreement and all related documents and
agreements, each certified by the Secretary of Sonoma as being true and correct
copies of the originals thereof subject to no modifications or amendments.
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(f) Sonoma shall have delivered to the Stockholders a
certificate of its Secretary certifying as to the incumbency of the directors
and officers of Sonoma and as to the signatures of such directors and officers
who have executed documents delivered at the Closing on behalf of Sonoma.
(g) The Stockholders shall have delivered to Sonoma a written
appraisal dated within 90 days of September 1, 1996, which states that the
assets of KWCHI, as of the date of such appraisal, have a fair market value of
not less than $7,000,000.00.
1.4 Conditions to Closing of Sonoma. Except as may be waived in
writing by Sonoma, the obligations of Sonoma to acquire the Partnership
Interests and the Stock are subject to the fulfillment at or prior to the
Closing Date of each of the following conditions:
(a) The representations and warranties of the Stockholders
contained herein shall have been true and correct in all respects when
initially made and shall be true and correct in all respects as of the Closing
Date.
(b) The Stockholders shall have performed and complied with
all covenants and conditions required by this Agreement to be performed and
complied with by the Stockholders on or prior to the Closing Date.
(c) No investigation, action, proceeding or order by any court
or governmental body or agency shall have been threatened, orally or in
writing, asserted, instituted or catered to restrain or prohibit the carrying
out of the transactions contemplated hereby.
(d) No material adverse change in the condition (financial or
otherwise, operations, assets, liabilities, business or prospects of Key West
Conch Harbor shall have occurred since the date of the Key West Conch Harbor
Balance Sheet.
(e) All authorizations, approvals consents and waivers of any
governmental authority or third party, each as required to permit the
consummation of the transactions contemplated by this Agreement, shall have
been obtained and shall not be terminated, suspended or withdrawn as of the
Closing Date.
(f) Sonoma shall have completed a due diligence review of the
business, operations and financial statements of KWCHI the results of which
shall be satisfactory to Sonoma in its sole discretion.
(g) Sonoma shall have received all documents, duly executed in
form satisfactory to Sonoma and its counsel, referred to in Section 1.3 above.
1.5 Conditions to Closing of the Stockholders. Except as may be
waived in writing by KWCHI and the Stockholders the obligations of the
Stockholders hereunder are subject to fulfillment at or prior to the Closing
Date of each of the following conditions:
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(a) The representations and warranties of Sonoma contained
herein shall have been true and correct in all respects when initially made and
shall be true and correct in all respects as of the Closing Date.
(b) Sonoma shall have performed and complied in all material
respects with all covenants and conditions required by this Agreement to be
performed and complied with by it prior to the Closing Date.
(c) No investigation, action, proceeding or order by any court
or governmental body or agency shall have been threatened orally or in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
(d) No material adverse change in the condition (financial or
otherwise), operations, assets, liabilities, Business or prospects of Sonoma
shall have occurred since the date of the Sonoma Balance Sheet.
(e) All authorizations, approvals consents and waivers of any
governmental authority or third party, each as required to permit the
consummation of the transactions contemplated by this Agreement, shall have
been obtained and shall not be terminated, suspended or withdrawn as of the
Closing Due.
(f) The Stockholders shall have completed a due diligence
review of the business, operations and financial statements of Sonoma, the
results of which shall be satisfactory to the Stockholders in their sole
discretion.
(g) Sonoma shall have tendered to those indicated on Schedule
1.4(g) the amounts set forth opposite each's name.
(h) The Stockholders, as the case may be, shall have received
all documents referred to in Section 1.3 above.
1.6 Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
(a) "Cash Compensation" shall mean wages, salaries, bonuses
(discretionary and formula) and other compensation paid or payable in cash.
(b) "Code" shall mean the Internal Revenue Code.
(c) "Environmental Laws" shall mean any laws or regulations
pertaining to health or the environment, including without limitation (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(42 U.S.C. Sections 9601 et seq., as amended from time to time ("CERCLA")
(including without limitations as amended pursuant to the Superfund Amendments
and Reauthorization Act of 1986), and regulations promulgated under CERCLA,
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(ii) the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Sections
6901 et seq.), as amended from time to time ("RCRA"), and regulations
promulgated thereunder, (iii) statutes, rules or regulations, whether federal,
state or local, relating to asbestos or polychlorinated biphenyls, and (iv) the
provisions contained in the statutes of any applicable state statutes.
(d) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(e) "GAAP" shall mean generally accepted accounting
principles.
(f) "KWCHI" shall mean the balance sheet of KWCHI as of June
30, 1996, which KWCHI Balance Sheet is included in tile KWCHI Financial
Statements.
(g) "KWCHI Financial Statements" shall mean (i) the audited
balance sheet, statement of operations and statements of cash flow of KWCHI as
of December 31, 1994 and 1995 and (ii) unaudited balance sheets, statements of
operations and statements of cash flow of KWCHI for the 6-month period ended
June 30, 1996.
(h) "Proprietary Rights" shall mean (a) all trade-marks,
trade-names, service marks and other trade designations, including common law
rights, registrations and applications therefor, and all patents, copyrights
and applications currently owned, in whole or in part by KWCHI with respect to
the business of KWCHI and all licenses, royalties, assignments and other
similar agreements relating to the foregoing to which KWCHI is a party
(including expiration date if applicable), and (b) all agreements relating to
technology, know-how or processes that KWCHI is licensed or authorized to use
by others, or which it licenses or authorizes others to use.
(i) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(j) "Sonoma Balance Sheet" shall mean the balance sheet of
Sonoma as of June 30, 1996, which Sonoma Balance Sheet is included in the
Sonoma Financial Statements.
(k) "Sonoma Financial Statements" shall mean (i) the audited
balance sheet, statement of operations and statements of cash flow of Sonoma as
of June 30, 1995 and 1996 and (ii) unaudited balance sheets, statements of
operations and statements of cash flow of Sonoma for the 6-month period ended
September 30, 1996.
(l) "Subsidiary" shall mean any corporation, partnership,
joint venture or other legal entity in which another entity owns, directly or
indirectly, an equity interest.
SECTION 2. REPRESENTATIONS OF THE STOCKHOLDERS
The Stockholders and KWCHI severally and jointly, represent and warrant
to Sonoma that:
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2.1 Organization. KWCHI is a corporation validly existing and in
good standing under the laws of the State of Florida, and neither is required
to be qualified to do business as a foreign limited partnership in any other
jurisdiction.
2.2 Corporate and Individual Power. KWCHI has all required power and
authority to own its properties and to carry on its business as presently
conducted and as proposed to be conducted. Each Stockholder has all required
power and authority to execute and deliver this Agreement and to carry out the
transactions contemplated by this Agreement.
2.3 Authorization. All action on the part of each Stockholder and
KWCHI necessary for the authorization, execution, delivery and performance of
this Agreement by such Stockholder and the performance of such Stockholders'
obligations hereunder have been taken. This Agreement and all documents
executed pursuant to this Agreement are valid and binding obligations of each
Stockholder, enforceable according to its terms, except as may be limited by
(a) applicable bankruptcy, insolvency, reorganization or other similar laws of
general application relating to or affecting the enforcement of creditor
rights, (b) laws and judicial decisions regarding indemnification for violation
of federal securities laws, and (c) the availability of specific performance or
other equitable remedies.
2.4 Capitalization. The names and ownership interests of the KWCHI
Stockholders are as set forth in this Paragraph. Other than Xxxx Xxxxx and
Xxxxx Xxxxxxx Xxxx, there are no other owners of any interests in KWCHI and
there are no outstanding options, or other rights or obligations to purchase or
acquire an interest in KWCHI, nor any outstanding securities convertible into
or exchangeable for such an ownership interest. There are no agreements to
which KWCHI, any of the Stockholders is a party or has knowledge regarding the
issuance, registration, voting or transfer of any partnership interest in KWCHI
or capital stock in KWCHI. The Stockholders are the sole shareholder of KWCHI.
Xxxxx Xxxxxxx Xxxx currently owns 73.625 shares of KWCHI and Xxxx Xxxxx, 26.375
shares of KWCHI. Upon consummation of this agreement, Xxxxx Xxxxxxx Xxxx is to
exchange her 73.625 shares of KWCHI stock for 182,700 shares of new Sonoma
stock and Xxxxxxxxx Xxxxx is to exchange his 26.375 shares of KWCHI stock for
117,300 shares of new Sonoma stock.
2.5 Effect of Transactions, Compliance with Obligations. Each
Stockholder's execution and delivery of this agreement, its performance of the
transactions contemplated by this Agreement do not and will not violate any
terms of the Certificate of Incorporation or Bylaws of KWCHI, or any judgment,
decree or order, or any material contract or obligation of such Stockholder, or
any statute, rule or regulation of any federal, state or local government or
agency applicable to such Stockholder, or any material contract to which such
Stockholder is bound. No consent, approval or filing with any regulatory
agency is required to be taken by such Stockholder in connection with the
transactions contemplated by the Agreement, except those which such Stockholder
has obtained or made in a timely manner.
2.6 Brokerage. There are no claims for brokerage commissions,
finder's fees or similar compensation in connection with the transactions
contemplated by this Agreement based
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on any arrangement or agreement made by KWCHI, other than any fee owed. Each
Stockholder agrees to indemnify and hold Sonoma harmless for any such brokerage
commissions, finders foes or similar compensation.
2.7 Consents. Except as set forth, on Schedule 2.7, no consent,
authorization. approval, permit or license of, or filing with, any governmental
or public body or authority, any lender or lessor or any other person or entity
is required so authorize, or is required in connection with, the execution,
delivery and performance of this Agreement or the agreements contemplated
hereby on the part of the Stockholders.
2.8 Status of Stockholders. Each of the Stockholders is
knowledgeable and experienced in making venture capital investments and is able
to bear the economic risk of the loss of its investment in Sonoma. Each
Stockholder is acting on its own behalf in connection with the investigation
and examination of Sonoma end its decision to execute this Agreement and
exchange capital stock for the Stock.
2.9 Unregistered Securities Under Securities Act. Each Stockholder
acknowledges that the Stock has not been registered under the Securities Act
and therefore the Stock is not fully transferable except as permitted under
various exemptions contained in the Securities Act and the rules of the
Securities and Exchange Commission hereunder. Each Stockholder acknowledges
that a legend to such effect shall be placed on the certificates representing
the Stock.
2.10 No Distribution of Stock to Public. Each Stockholder represents
and warrants that such Stockholder is receiving the Stock for its own account
and not for the purpose of resale or any other distribution of the Stock. Each
Stockholder represent and warrant that such Stockholder has no present
intention of disposing of all or any part of such shares.
SECTION 3. REPRESENTATIONS OF SONOMA
Sonoma hereby represents and warrants to the Stockholders that:
3.1 Organization. Sonoma is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada, and is not
required to be qualified to do business as a foreign corporation in any other
jurisdiction.
3.2 Corporate Power. Sonoma has all required corporate power and
authority to own its properties and to carry on its business as presently
conducted and as proposed to be conducted. Sonoma has all required corporate
power and authority to execute and deliver this Agreement, and to carry out the
transactions contemplated by this Agreement.
3.3 Authorization. All corporate action on the part of Sonoma, its
directors and shareholders necessary for the authorization, execution, delivery
and performance of this Agreement by Sonoma and the performance of all of
Sonoma's obligations hereunder has been
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taken. This Agreement and all documents executed pursuant to this Agreement
are valid and binding obligations of Sonoma, enforceable according to their
terms, except as may be limited by (a) applicable bankruptcy, insolvency,
reorganization or other similar laws of general application relating to or
affecting the enforcement of creditor rights, (b) laws and judicial decisions
regarding indemnification for violations of federal securities laws, and (c)
the availability of specific performance or other equitable remedies. The
execution, delivery and performance of this Agreement have been duly authorized
by all necessary corporate action of Sonoma.
3.4 Capitalization. The authorized and issued capital stock of Sonoma
and the names and ownership interests of the shareholders of Sonoma are as set
forth in the attached proposed "Business Plan". All of the presently
outstanding shares of capital stock of Sonoma have been validly authorized and
issued and are fully paid and nonassessable. Except as provided herein, Sonoma
has not issued any other shares of its capital stock and there are no
outstanding options, warrants, subscriptions or over rights or obligations to
purchase or acquire any of such shares, nor any outstanding securities
convertible into or exchangeable for such shares. Except as disclosed herein,
or as contemplated under this Agreement (and the other agreements executed in
connection herewith), there are no agreements to which Sonoma is a party or has
knowledge regarding the issuance, registration, voting or transfer of its
outstanding shares of capital stock. No dividends are accrued but unpaid on
any capital stock of Sonoma.
3.5 Preemptive Rights Registration Rights. There are no preemptive
rights affecting the issuance or sale of Sonoma's capital stock. Sonoma is not
under any contractual obligation to register (in compliance with the filing
requirements and being deemed effective under the Securities Act) any of its
presently outstanding securities or any of its securities which may hereafter
be issued, except as described in Schedule 3.5.
3.6 Financial Statements. Schedule 3.6 contains correct and complete
copies of the Sonoma Financial Statements. The Sonoma Financial Statements are
in accordance with the books and records of Sonoma, and have been prepared
consistent with past practices, have been prepared in accordance with GAAP
(except that the unaudited Sonoma Financial Statements do not contain notes)
and present fairly in all material respects the financial position of Sonoma on
the dates of such statements and the results of their operations for the
periods covered. Sonoma maintains its books, records and accounts in
accordance with good business practice and in sufficient detail to reflect
accurately and fairly the transactions and dispositions of its assets,
liabilities and securities.
3.7 Liabilities and Obligations. A description of all liabilities
and obligations of Sonoma, accrued, contingent or otherwise (known or unknown
and asserted or unasserted), arising out of transactions effected or events
occurring on or prior to the date thereof are as set forth on Schedule 3.7
attached hereto, which liabilities and obligations will be the only liabilities
and obligations of Sonoma on the Closing Date. Except as set forth in Schedule
3.7, Sonoma is not liable upon or with respect to, or obligated in any other
way to provide funds in respect of or to guarantee or assume in any manner, any
debt, obligation or dividend of any person,
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corporation, association, partnership, joint venture, trust or other entity,
and Sonoma knows of no basis for the assertion of any other claims or
liabilities of any nature or in any amount.
3.8 Employee Matters. Sonoma has no employees.
3.9 Employee Benefit Plans. Sonoma does not have or, in the past
five years has had or been subject to, any Employee Benefit Plans.
3.10 Commitments. Sonoma is not a party to any document, instrument
or agreement, except as set forth on Schedule 3.10.
3.11 Tax Matters. Except as set forth in Schedule 3.11, all required
foreign, federal, state, local and other tax returns, notices and reports
(including, without limitation, income, property, sales, use, franchise,
capital stock, excise, added value, employees' income withholding, social
security and unemployment tax returns) of Sonoma have been accurately prepared
and duly and timely filed, and all foreign, federal, state, local and other
taxes required to be paid with respect to the periods covered by such returns
have been paid. Sonoma is not and have not been delinquent in the payment of
any tax, assessment or governmental charge. Sonoma has never had any tax
deficiency proposed or assessed against it and have not executed any waiver of
any statute of limitations on the assessment or collection of any tax or
governmental charge. Except for sales tax audits, none of Sonoma's franchise
tax returns has ever been audited by governmental authorities. No tax audit,
action, suit, proceeding investigation or claim is now pending nor, to the best
of Sonoma's knowledge, threatened against Sonoma, and no issue or question has
been raised (and is currently pending) by any taxing authority in connection
with any of Sonoma's tax returns or reports.
3.12 Assets. Sonoma has no assets, personal or real, tangible or
intangible.
3.13 Effect of Transactions; Compliance with Obligations. Sonoma's
execution and delivery of this Agreement, its performance of the transactions
contemplated by this Agreement, and the performance of the business of their
respective business as now conducted, does not and will not violate any terms
of the Articles of Incorporation or Bylaws of Sonoma or violate any judgment,
decree or order, or any material contract or obligation of Sonoma, or any
statute, rule or regulation of any federal, state or local governmental or
agency applicable to Sonoma. The offer and sale of the Stock will be in
compliance with federal and state securities laws. No consent, approval or
filing with any regulatory agency is required to be taken by Sonoma in
connection with the transactions contemplated by the Agreement, except those
which Sonoma has obtained or made in a timely manner, except for any filing of
Form D or any applicable state blue sky filing that may be made by Sonoma after
the Closing.
3.14 Litigation. There is no litigation, arbitration or governmental
proceeding or investigation pending or, to the knowledge of Sonoma, threatened
(a) against Sonoma, (b) affecting any of the properties or assets of Sonoma, or
(c) against any officer, director, shareholder or employee of Sonoma in such
capacity or relating to his prior employment
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relationships. Sonoma is not aware of any fact that is likely to form the
basis of any such litigation, arbitration or proceeding.
3.15 Legal Compliance. Sonoma has all material franchises, permits,
licenses and other rights and privileges necessary to permit it to own its
properties and to conduct its business as presently conducted. The business
and operations of Sonoma have been and are being conducted in accordance with
all applicable laws, rules and regulations, and Sonoma is not in violation of
any judgment, law or regulation.
3.16 Subsidiaries. Sonoma does not have any direct or indirect
subsidiaries yet, however it is planned that Jamestown Resort & Marina, Inc.,
Jamestown Resort & Marina, Ltd. and KWCHI will become wholly owned subsidiary
entities of the Company after consummation of these transactions.
3.17 Brokerage. There are no claims for brokerage commissions,
finder's fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by
Sonoma. Sonoma agrees to indemnify and hold the Stockholders harmless for any
such brokerage commissions, finders fees or similar compensation.
3.18 Environmental Matters. Neither Sonoma nor any of its assets is
currently in violation of, or subject to any existing, pending or threatened
investigation or inquiry by any governmental authority or to any remedial
obligations under, any Environmental Laws. To the best knowledge of Sonoma,
the assets of Sonoma have never been used in a manner that would be in
violation of any of the Environmental Laws, including without limitation
CERCLA, RCRA and any applicable state statutes. Sonoma has not obtained and is
not required to obtain, and Sonoma has no knowledge of any reason Sonoma will
be required to obtain, any permits, licenses or similar authorizations to
construct, occupy, operate or use any buildings, improvements, fixtures and
equipment owned or leased by Sonoma by reason of any Environmental Laws. To
the best knowledge of Sonoma, none of the assets owned or leases by Sonoma are
on any federal or state "Superfund" list or subject to any environmentally
related liens.
3.19 Certain Payments. To the best knowledge of Sonoma, neither
Sonoma nor any director, officer or employee of Sonoma has paid or caused to be
paid, directly or indirectly, in connection with the business of Sonoma: (a) to
any government or agency thereof or any agent of any supplier or customer any
bribe, kickback or other similar payment; or (b) any contribution to any
political party or candidate (other than from personal funds of directors,
officers or employees not reimbursed by their respective employers or as
otherwise permitted by applicable few).
3.20 Consents. Except as set forth on Schedule 3.20, no consent,
authorization, approval, permit or license of, or filing with, any governmental
or public body or authority, any lender or lessor or any other person or entity
is required to authorize, or is required in
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connection with, the execution, delivery and performance of this Agreement or
the agreements contemplated hereby on the part of Sonoma.
3.21 Authorization to Issue Stock. Sonoma has taken, or will have
taken on or prior to the Closing, all action necessary to permit it to issue
the Stock to the Stockholders. The Stock will, when issued, be duly authorized,
validly issued, fully paid and nonassessable, free and clear of any liens,
claims, charges or security interest and no shareholder of Sonoma will have any
preemptive right of subscription or purchase in respect thereof.
3.22 SEC Reports. Since June 30, 1995, Sonoma has filed all forms,
documents and reports with the SEC required to be filed by it pursuant to
federal securities laws and the SEC rules and regulations thereunder (the "SEC
Reports"), all of which complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act. To the knowledge of
Sonoma, the SEC Reports do not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein to make the
statements contained therein not misleading.
SECTION 4. THE STOCKHOLDERS COVENANTS
The Stockholders, severally and jointly, agree that between the date
hereof and the Closing:
4.1 Consummation of Agreement. The Stockholders shall use all
reasonable commercial efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions.
4.2 Business Operations. KWCHI shall operate its business in the
ordinary course. KWCHI shall use its best efforts to preserve the businesses
of KWCHI intact. The Stockholders shall not take any action that could
adversely affect the condition (financial or otherwise), operations, assets,
liabilities, business or prospects of KWCHI without the prior written consent
of Sonoma or take or fail to take any action that would cause or permit the
representations made in Section 2 to be inaccurate at the time of Closing or
the Stockholders from making such representations and warranties at the
Closing.
4.3 Access. KWCHI and its authorized representatives full access to,
and make available for inspection, all of the assets and businesses of KWCHI,
and permit Sonoma and its authorized representatives to inspect and make copies
of all documents, records and information with respect to the affairs of KWCHI
as Sonoma and its representatives may request, all for the sole purpose of
permitting Sonoma to become familiar with the business and assets and
liabilities of KWCHI.
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SECTION 5. SONOMA'S COVENANTS
Sonoma agrees that between the date hereof and the Closing:
5.1 Consummation of Agreement. Sonoma shall use its best efforts to
cause the consummation of the transactions contemplated hereby in accordance
with their terms and conditions.
5.2 Business Operations. Sonoma shall operate its business in the
ordinary course. Sonoma shall not take any action that could adversely affect
the condition (financial or otherwise), operations, assets, liabilities,
business or prospects of Sonoma without the prior written consent of the
Stockholders or take or fail to take any action that would cause or permit the
representations made in Section 3 be inaccurate at the time of Closing or
preclude Sonoma from making such representations and warranties at the Closing.
5.3 Access. Sonoma shall permit the Stockholders and their
authorized representatives full access to, and make available for inspection,
all of the assets and business of Sonoma and permit the Stockholders and their
authorized representatives to inspect and make copies of all documents, records
and information with respect to the affairs of Sonoma as the Stockholders and
their representatives may request, all for the sole purpose of the Stockholders
to become familiar with the business, assets and liabilities of Sonoma.
5.4 Approvals of Third Parties. Sonoma shall use its best efforts to
secure, as soon as practicable after the date hereof, all necessary approvals
and consents of third parties to the consummation of the transactions
contemplated hereby.
SECTION 6. INDEMNIFICATION
6.1 Indemnification by the Stockholders. Subject to the terms and
conditions of this Section 6, each Stockholder severally and jointly, agree to
indemnify, defend and hold Sonoma and its directors, officers, agents,
attorneys and affiliates harmless from and against all losses, claims,
obligations, demands assessments, penalties, liabilities, costs, damages,
attorneys' fees and expenses (collectively, "Damages"), asserted against or
incurred by such indemnities by reason of or resulting from a breach of any
representation, warranty or covenant of such Stockholder contained herein, in
any exhibit, schedule, certificate or financial statement delivered hereunder,
or in any agreement executed in connection with the transactions contemplated
hereby.
6.2 Indemnification by Sonoma. Subject to the terms and conditions
of this Section 6, Sonoma hereby agrees to indemnify, defend and hold the
Stockholders and its or their respective directors, officers, agents, attorneys
and affiliates harmless from and against all Damages asserted against or
incurred by any of such indemnities by reason of or resulting from a breach of
any representation, warranty or covenant of Sonoma contained herein or in any
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exhibit, schedule or certificate delivered hereunder, or in any agreement
executed in connection with the transactions contemplated hereby.
6.3 Conditions of Indemnification. The respective obligations and
liabilities of the Stockholders and Sonoma (the "indemnifying party") to the
other (the "party to be indemnified") under Sections 6.1 and 6.2 with respect
to claims resulting from the assertion of liability by third parties shall be
subject to the following terms and conditions:
(a) Within 20 days (or such earlier time as might be required
to avoid prejudicing the indemnifying party's position) after receipt of notice
of commencement of any action evidenced by service of process or other legal
pleading, the party to be indemnified shall give the indemnifying party written
notice thereof together with a copy of such claim, process or other legal
pleading and the indemnifying party shall have the right to undertake the
defense thereof by representatives of its own choosing and at its own expense;
provided that the party to be indemnified may participate in the defense with
counsel of its own choice, the fees and expenses of which counsel shall be paid
by the party to the indemnified unless (i) the indemnifying party has agreed to
pay such fees and expenses, (ii) the indemnifying party has failed to assume
the defense of such action or (iii) the named parties to any such action
(including any impleaded parties) include both the indemnifying party and the
party to be indemnified and the party to be indemnified has been advised by
counsel that there may be one or more legal defenses available to it that are
different from or additional to those available to the indemnifying party (in
which case, if the party to be indemnified informs the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action on behalf of the party to be indemnified, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for the party to be indemnified, which
firm shall be designated in writing by the party to be indemnified).
(b) In the event that the indemnifying party, by the 30th day
after receipt of notice of any such claim (or, if earlier, by the 10th day
preceding the day on which an answer or other pleading must be served in order
to prevent judgment by default in favor of the person asserting such claim),
does not elect to defend against such claim, the party to be indemnified will
(upon further notice to the indemnifying party) have the right to undertake the
defense, compromise or settlement of such claim on behalf of and for the
account and risk of the indemnifying party and at the indemnifying party's
expense, subject to the right of the indemnifying party to assume the defense
of such claims at any time prior to settlement, compromise or final
determination thereof.
(c) Notwithstanding the foregoing, the indemnifying party
shall not settle any claim without the consent of the party to be indemnified
unless such settlement involves only the payout of money and the claimant
provides to the party to be indemnified a release from all
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16
liability in respect of such claim. If the settlement of the claim involves
more than the payment of money, the indemnifying party shall not settle the
claim without the prior consent of the party to be indemnified. The party to be
indemnified and the indemnifying party will each cooperate with all reasonable
requests of the other.
6.4 Waiver. No waiver by any party of any default or breach by
another party of any representation, warranty, covenant or condition contained
in this Agreement, any exhibit or any document, instrument or certificate
contemplated hereby shall be deemed to be a waiver of any subsequent default or
breach by such party of the same or any other representation, warranty covenant
or condition. No act, delay, omission or course of dealing on the part of any
party in exercising any right, power or remedy under this Agreement or at law
or in equity shall operate as a waiver thereof or otherwise prejudice any of
such party's rights, powers and remedies. All remedies, whether at law or in
equity, shall be cumulative and the election of any one or more shall not
constitute a waiver of the right to pursue other available remedies.
6.5 Remedies Not Exclusive. The remedies provided in this Section 6
shall not be exclusive of any other rights or remedies available to one party
against the other, either at law or in equity.
6.6 Costs, Expenses and Legal Fees. Each party hereto shall bear its
own costs and expenses (including attorneys' fees and expenses), except that
each party hereto that is shown to have breached this Agreement or any other
agreement contemplated hereby agrees to pay the costs and expenses (including
reasonable attorneys' fees and expenses) incurred by any other party in
successfully (i) enforcing any of the terms of this Agreement against such
breaching party or (ii) proving that another party breached any of the terms of
this Agreement.
6.7 Specific Performance. Each party acknowledges that a refusal by
any party hereto to consummate the transactions contemplated hereby will cause
irreparable harm to the other parties to this Agreement for which there may be
no adequate remedies, at law and for which the ascertainment of damages would
be difficult. Therefore, each party shall be entitled in addition to, and
without having to prove the inadequacy of, other remedies at law, to specific
performance of this Agreement, as well as injunctive relief (without being
required to post bond or other security).
SECTION 7. TERMINATION
7.1 Termination. This Agreement may be terminated:
(a) At any time prior to the Closing Date by mutual agreement
of all parties.
(b) By any party if the Closing does not occur on or prior to
March 31, 1997.
(c) At any time prior to the Closing Date by Sonoma if any
representation or warranty of the Stockholders contained
in this Agreement or in any
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17
certificate or other document executed and delivered by
the Stockholders pursuant to this Agreement is or becomes
untrue or breached in any material respect, or if the
Stockholders fail to comply in any material respect with
any covenant confined herein.
(d) At any time prior to the Closing Date by the Stockholders
if any representation or warranty of Sonoma contained in
this Agreement or in any certificate or other document
executed and delivered by Sonoma pursuant to this
Agreement is or becomes untrue or breached in any material
respect or if Sonoma fails to comply in any material
respect with any covenant contained herein.
In the event this Agreement is terminated pursuant to subparagraph (b), (c) or
(d) above, each party shall be entitled to pursue, exercise end enforce any and
all remedies, rights, powers and privileges available at law or in equity. In
the event of a termination of this Agreement under the provisions of this
Section 7, a party not then in material breach of this Agreement shall stand
fully released and discharged of any and all obligations under this Agreement.
SECTION 8. GENERAL
8.1 Amendments. This Agreement may not be amended, except in a
written document signed by Sonoma, KWCHI and the Stockholders.
8.2 Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants contained herein shall survive the
Closing and all statements contained in any certificate, exhibit or other
instrument delivered by or on behalf of the parties hereto pursuant to this
Agreement shall be deemed to have been representations and warranties by the
parties hereto, as the case may be, and, notwithstanding any provision in this
Agreement to the contrary, shall survive the Closing for a period of three
years.
8.3 Heading. The headings of the Sections and paragraphs of this
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
8.4 Governing Law. THIS AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF KENTUCKY WITHOUT GIVING EFFECT TO
THE CHOICE OF LAW PROVISIONS THEREOF.
8.5 Notices and Demands. Any notice or demand which is permitted or
required hereunder will be deemed to have been sufficiently received (except as
otherwise provided herein) (a) upon receipt when personally delivered, (b) or
one (1) day after sent by overnight delivery or telecopy providing confirmation
or receipt of delivery, or (c) three (3) days after being sent by certified or
registered mail, postage and charges prepaid, return receipt requested to the
addresses listed on Schedule 8.5 attached hereto, or at any other address
designated by any party hereto to all other parties hereto in writing.
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18
8.6 Severability. If any provision of this Agreement is held invalid
under applicable law, such provision will be ineffective to the extent of such
invalidity, and such invalid provision will be modified to the extent necessary
to make it valid and enforceable. Any such invalidity will not invalidate the
remainder of this Agreement.
8.7 Expenses. Each party hereto will bear its own fees for counsel
and accountants and other expenses relating to the negotiation and consummation
of the transactions contemplated herein.
8.8 Confidentiality, Publicity and Disclosures. Each party shall
keep this Agreement and its terms confidential, and shall make no press release
or public disclosure, either written or oral, regarding the transactions
contemplated by this Agreement without the prior knowledge and consent of the
other parties hereto; provided that the foregoing shall not prohibit any
disclosure (i) by press release, filing or otherwise that is required by
federal securities laws, or (ii) to attorneys, accountants, investment bankers
or other agents of the parties assisting the parties in connection with the
transactions contemplated by this Agreement.
8.9 Entire Agreement. This Agreement and the exhibits to this
Agreement constitute the entire agreement of the parties, and supersede any
prior agreements.
8.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be taken to be an original, but such
counterparts will together constitute one document.
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19
The undersigned have executed this Agreement as of the day and year first
written above.
SONOMA INTERNATIONAL
By:
------------------------------------------
Xxxxx X. Xxxxxxxxx, President
KEY WEST CONCH HARBOR, INC.
By: /s/
------------------------------------------
Its: President
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20
SIGNATURE PAGE
TO
SECURITIES AND EXCHANGE AGREEMENT
This signature page to the Securities and Exchange Agreement, dated as
of October 15, 1996, by and among Sonoma International, a Nevada corporation,
and the holders of all of the issued and outstanding capital stock of Key West
Conch Harbor, Inc., a Florida corporation, is executed by the undersigned as of
the date set forth above.
/s/ A. Xxxxxxxxx Xxxxx
-------------------------------------
A. Xxxxxxxxx Xxxxx, Individually
/s/ Xxxxx Xxxxxxx Xxxx
-------------------------------------
Xxxxx Xxxxxxx Xxxx, Individually
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21
Unanimous Consent of Directors of Sonoma International
The undersigned, being all of the members of the Board of Directors of
Sonoma International, a Nevada corporation (the "Corporation") do hereby
consent to the following resolutions:
The Board of Directors recommends that the Articles of Incorporation be
amended by consent of the stockholders holding a majority of the Corporation's
issued and outstanding shares of Common Stock. Accordingly, it is unanimously:
RESOLVED, that the Board of Directors hereby adopt and recommend
that the stockholders of the Corporation adopt the following
resolutions:
"RESOLVED, that Article I of the Articles of Incorporation of
Sonoma International be amended by the deletion of the existing ARTICLE
ONE and the addition of the following:
`The name of the Corporation is American Lodging & Leisure
Corporation.'"; and
"RESOLVED,that Article IV of the Articles of Incorporation of
Sonoma International be amended by the deletion of the existing ARTICLE
FOUR and the addition of the following paragraph immediately following
paragraph 3 thereof:
ARTICLE FOUR
The authorized capital stock of the Corporation is 20,000,000
shares of Common Stock, par value $0.001 per share. Upon filing of this
amendment with the Department of State of the State of Nevada the sixty
million (60,000,000) presently outstanding shares of the Corporation's
Common Stock par value of $0.001 per share shall forthwith be
reclassified and converted into 300,000 shares of the new Common Stock
of the par value of $0.001 per share at the rate of one-two hundredth
(1/200) share of the new Common Stock of the par value $0.001 per share
for each share of the presently outstanding Common Stock of the par
value of $0.001 per share. The Corporation shall not issue fractional
shares but shall pay in cash the fair value, as determined by the Board
of Directors, of fractional interests in shares as of the time when
those entitled to receive the interests are determined.'"
RESOLVED FURTHER, that November 4, 1996 be and it hereby is set
as the record date for the voting by consent upon said resolution to
amend the Corporation's Articles of Incorporation; and
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RESOLVED FURTHER, that an information statement complying with
the rules and regulations of the Securities and Exchange Act of 1934 be
and it hereby is, directed to be filed with the Securities and Exchange
to effect such amendment.
The Corporation has not had any operating activities for several years.
Several of the stockholders have arranged to have in excess of ten million
dollars of assets placed into the Company with the prospects of placing a
significantly larger amount of assets thereby increasing stockholder value to
the Company. It is the desire of the present Board of Directors to proceed in
accordance with such plan adopting an agreement whereby those responsible for
placing such assets into the Corporation would receive 85% of the Corporation's
issued and outstanding stock and placing those arranging for the conveyance of
such assets to take control of the Corporation's Board of Directors.
Accordingly, it is unanimously,
RESOLVED, that the form of Securities Exchange Agreement (the
"Jamestown Agreement"), the form of which has been presented to each
member of the Board of Directors, among the Corporation, the limited
partners of Jamestown Resorts & Marina Ltd., and Clear Creek
Investments, LLC, whereby an aggregate of 85% of the issued and
outstanding shares of Common Stock of the Corporation would be issued in
exchange for assets exceeding $10,000,000, said value to be supported by
either an audit or MAI appraisal be, and it hereby is, approved in all
respects, and the officers of the Corporation, or either of them, are
each hereby authorized, empowered, and directed, in the name and on
behalf of the Corporation to execute and deliver the Jamestown
Agreement, substantially in the form presented to the Board of
Directors, together with such changes as the officer executing the same
shall approve, his execution thereon to be conclusive evidence of his
approval thereof, including, without limitation, the alteration of the
Jamestown Agreement to permit the acquisition of securities of the
entity owning or to own the assets rather than acquiring the assets; and
RESOLVED FURTHER, that upon receipt by the Corporation of the
consideration set forth in the Jamestown Agreement, all such shares
shall be duly issued, fully paid, and nonassessable, and that the
Chairman, or the President, and the Secretary of the Corporation be, and
they hereby are authorized, empowered, and directed to execute and to
deliver stock certificates of the Corporation evidencing the issuance of
all such shares; and
RESOLVED FURTHER, that the proper officers of the Corporation be
and they hereby are authorized in the name and on behalf of the
Corporation to do and perform or cause to be done and performed all acts
and things as such officer or officers shall deem necessary, advisable
or appropriate to implement the foregoing resolutions, including,
without limitation, the increase in the number of authorized shares of
the Corporation or a reverse split or both, and to
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23
execute and deliver any agreements, certificates, directions,
representations, issuances and other instruments or documents of any
other acts and things as such officer or officers of the Corporation
shall deem necessary, advisable or appropriate to comply with the
purposes and intent of the foregoing resolutions, and
RESOLVED FURTHER, that effective immediately following the
consummation of the transactions contemplated by the Agreement, Xxxxx X.
Xxxxxxxxx, Xxxxxxx X. Xxxxxxxxx, and Xxxxxx X. Xxxxxxxxxx, have tendered
their respective resignations as directors and officers of the
Corporation; and
RESOLVED FURTHER, that effective immediately following the
consummation of the transactions contemplated by the Agreement, Xxxxxxx
X. Xxxxx, Xxxxxxx Xxx Xxxx and Xxxxx Xxxxxxxx be, and they hereby are
appointed to serve as directors of the Corporation until the election
and qualification of their respective successors; and
RESOLVED FURTHER, that the following individuals be and they
hereby are elected and appointed to serve in the office set forth next
to their name, to serve until the election and qualification of their
respective successor, said appointment to occur upon the closing of the
transaction contemplated in the Agreement
Xxxxxxx X. Hence President
Xxxxxxx Xxx Xxxx Vice President
Xxxxx Xxxxxxxx Secretary-Treasurer
The Corporation has arranged for the acquisition by the Corporation of
another entity that operates a Marina, namely, Key West Conch Harbor, Inc., a
Florida corporation. Accordingly, it is unanimously:
RESOLVED, that the form of Securities Exchange Agreement (the
"KWCHI Agreement"), the form of which has been presented to each member
of the Board of Directors, among the Corporation, and the stockholders
of Key West Conch Harbor. Inc., a Florida corporation, dated as of
October 31, 1996, whereby 300,000 of the issued and outstanding shares
of Common Stock, said number of shares to be based upon the number of
shares following the reverse split contemplated in the Jamestown
Agreement of the Corporation would be issued in exchange for all of the
issued and outstanding stock of said corporation, be and it hereby is,
approved in all respects, and the officers of the Corporation. or either
of them, are each hereby authorized, empowered, and directed, in the
name and on behalf of the Corporation, to execute and deliver the KWCHI
Agreement, substantially in the form presented to the Board of
Directors, together with such changes as the officer executing the same
shall approve, his execution
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24
thereon to be conclusive evidence of his approval thereof, including,
without limitation, the alteration of the KWCHI Agreement to permit the
acquisition of securities of the entity owning or to own the assets
rather than acquiring the assets; and
RESOLVED FURTHER, that upon receipt by the Corporation of the
consideration set forth in the KWCHI Agreement, all such shares shall be
duly issued, fully paid, and non-assessable, and that the Chairman, or
the President, and the Secretary of the Corporation be, and they hereby
are authorized, empowered and directed to execute and to deliver stock
certificates of the Corporation evidencing the issuance of all such
shares; and
RESOLVED FURTHER, that the proper officers of the Corporation be,
and they hereby are, authorized in the name and on behalf of the
Corporation to do and perform or cause to be done and performed all acts
and things as such officer or officers shall deem necessary, advisable
or appropriate to implement the foregoing resolutions, including,
without limitation, the increase in the number of authorized shares of
the corporation or a reverse split or both, and to execute and deliver
any agreements, certificates, directions, representations, issuances and
other instruments or documents of any other acts and things as such
officer or officers of the Corporation shall deem necessary, advisable
or appropriate to comply with the purposes and intent of the foregoing
resolutions.
In connection with the Corporation's reorganization, it is desirable to
adopt an incentive stock plan. Accordingly, it is unanimously:
RESOLVED, that the form of 1996 Long Term Incentive Plan (the
"Incentive Plan"), the form of which has been presented to each member
of the Board of Directors, setting aside 350,000 shares of the
Corporation's Common Stock after the stock split referred to in the
Jamestown Agreement is effected, be, and it hereby is approved in all
respects, and the officers of the Corporation, or either of them, are
each hereby authorized, empowered, and directed, in the name and on
behalf of the Corporation, to execute and deliver the Incentive Plan,
substantially in the form presented to the Board of Directors, together
with such changes as the officer executing the same shall approve, his
execution thereon to be conclusive evidence of his approval thereof; and
RESOLVED FURTHER, that the proper officers Corporation be, and
they hereby are, authorized in the name and on behalf of the Corporation
to do and perform or cause to be done and performed all acts and things
as such officer or officers shall deem necessary, advisable or
appropriate to implement the foregoing resolutions, including, without
limitation, the ratification of the Incentive Plan by the Corporation's
Stockholders, and to execute and deliver any agreements, certificates,
directions, representations, issuances and other
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25
instruments or documents of any other acts and things as such officer or
officers of the Corporation shall deem necessary, advisable or
appropriate to comply with the purposes and intent of the foregoing
resolutions.
The Corporation has not held a meeting of stockholders since 1985 and as
part of the consent it is desirable that the director's acts be ratified.
Accordingly, it is unanimously:
RESOLVED, that the corporation hereby asks the stockholders to
ratify and approve the acts of the directors, insofar as those acts do
not constitute illegalities or improprieties, since the last meeting of
the Stockholders held in 1985.
IN WITNESS WHEREOF, the undersigned have hereunto set their hand as of
the 31st day of October, 1996.
/s/ Xxxxx X. Xxxxxxxxx
------------------------------
Xxxxx X. Xxxxxxxxx
/s/ Xxxxxxx Xxxxxxxxx
------------------------------
Xxxxxxx Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxxxx
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